CERC Reaffirms Procedure for Recovering Legacy Dues in DSM Pool

15 Jan 2025 CW Team

It has directed distribution companies (DISCOMs) to ensure the timely payment of dues to avoid delays in compensating ancillary service providers and maintaining grid stability.

Notified in August 2024, the regulations outline a process for addressing deficits in the Deviation and Ancillary Service Pool Account (DSM Pool Account) under Regulation 9(7). Following the notification, the NLDC submitted a detailed procedure for recovering dues in two categories:

? Legacy dues: Dues accumulated before September 16, 2024. ? Current dues: Dues accrued on or after September 16, 2024.

CERC approved the procedure to facilitate efficient recovery of dues. However, NLDC reported that some DISCOMs had either not paid or had partially paid their dues. The DISCOMs raised concerns about the fairness of recovering legacy dues, arguing that the procedure did not explicitly mention provisions for such recovery.

The Commission emphasized that the DSM Pool Account is crucial for ensuring payments to ancillary service providers and maintaining grid security. Delays in payments could discourage service providers, potentially affecting grid operations.

CERC referred to its earlier Staff Paper on ‘Grid Security Charge,’ which highlighted the growing deficit in the DSM Pool Account due to high demand and insufficient reserves. The explanatory memorandum to the DSM Regulations also noted a ?4 billion (~$46.2 million) deficit as of March 2024, underscoring the need for a robust recovery framework.

Most available forecasting models provide predictions only in broader hourly intervals, which are insufficient for the precision demanded by the new rules. Additionally, these tools often fail to account for hyper-local weather conditions—especially critical for wind farms, where slight variations in wind speed across small distances can result in significant deviations from the forecasted output.

The Central Electricity Regulatory Commission (CERC) has reiterated that the approved methodology in the National Load Despatch Centre's (NLDC) detailed procedure applies to all deficits in the Deviation Settlement Mechanism (DSM) Pool Account, starting September 16, 2024. It has directed distribution companies (DISCOMs) to ensure the timely payment of dues to avoid delays in compensating ancillary service providers and maintaining grid stability. Notified in August 2024, the regulations outline a process for addressing deficits in the Deviation and Ancillary Service Pool Account (DSM Pool Account) under Regulation 9(7). Following the notification, the NLDC submitted a detailed procedure for recovering dues in two categories: ? Legacy dues: Dues accumulated before September 16, 2024. ? Current dues: Dues accrued on or after September 16, 2024. CERC approved the procedure to facilitate efficient recovery of dues. However, NLDC reported that some DISCOMs had either not paid or had partially paid their dues. The DISCOMs raised concerns about the fairness of recovering legacy dues, arguing that the procedure did not explicitly mention provisions for such recovery. The Commission emphasized that the DSM Pool Account is crucial for ensuring payments to ancillary service providers and maintaining grid security. Delays in payments could discourage service providers, potentially affecting grid operations. CERC referred to its earlier Staff Paper on ‘Grid Security Charge,’ which highlighted the growing deficit in the DSM Pool Account due to high demand and insufficient reserves. The explanatory memorandum to the DSM Regulations also noted a ?4 billion (~$46.2 million) deficit as of March 2024, underscoring the need for a robust recovery framework. Most available forecasting models provide predictions only in broader hourly intervals, which are insufficient for the precision demanded by the new rules. Additionally, these tools often fail to account for hyper-local weather conditions—especially critical for wind farms, where slight variations in wind speed across small distances can result in significant deviations from the forecasted output.

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